June 23, 2018

Pharisees of our time - House flippers

House flipping, and why we need to ban it. (Cross-posted on my Facebook page)

The whole process of "flipping" is a tit on a boar. Useless. The idea starts with the usual scammer's dream: buy a house on the cheap because it's in terrible shape, then do cosmetic fix-up, resulting in the proverbial silk purse made from a sow's ear, sell it, get obscene profit. Do it enough times, and you get a TV program on the HGTV channel, THEN you can fly into a City, rent their basketball arena, conduct a half-day seminar on How To Flip for $500 each person, make even MORE obscene profit and fly back out of town...

Okay, take an attrractive city, put an army of house-flippers to work in it. What's the result? Housing which isn't technically improved all that much, and the improvements which ARE made are cosmetic, so in ten years, the house will be a crap-hole all over again (and it's usually in a crappy neighborhood anyway). But Wait! There's More! The flipper is going to SELL this house immediately, and make maybe 20% to 50% on their "investment dollar" doing so, then THEY leave, take that money with them, so your CITY makes almost nothing from the deal and life DOES NOT IMPROVE FOR YOU.

The result of this flip, multiplied by hundreds to thousands of them in your City, means a huge jump in the value of YOUR home, much higher taxes, and the loss of "affordability" in your housing market, which means YOU are now stuck with the crowds of yuppies who buy the flips. They come in to town, earn obscenely high salaries for doing something with bits and bytes, stay a couple of years, invariably vote Democratic, then leave.

I have a solution to all this malaise. We use the power of taxation to keep the flippers away. Here's how we do it: First, define property owners by how long they have LIVED IN their homes: over 30 years, they are "Pioneers". Over 10 years up to 30, they are "Sustainers". 5 to 10 years, they are "Locals" and under 5 years, they are "Transients". Real estate taxes are assessed on a sliding scale by these categories. Pioneers pay the smallest RATE, Transients the highest. Any tax rate higher than Local, the difference is used to LOWER the rate for Pioneers. Now for the flippers: their obscene profit is taxed at 50%, and that money is used SPECIFICALLY to lower the homeowner taxes, across the board, except for the Transient level. Secondary idea: use this tax money to fund a grant system for those who actually want to build NEW housing, because new houses are built with new materials to new codes, are more efficient, by far, than cosmetically-changed 40-70 year-old housing stock.

Make these changes, and the flipper-scammers will put your City in the rear-view mirror, and within 10 years, real estate values will start to return more towards normal, more towards what they were before the flipping-craze hit town.

Oh, by the way, those Pioneer home owners? They are amost invariably more fiscally responsible, are better neighbors than the yuppie hordes anyway.